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Chinese automaker BAIC will start full-scale production of its compact Sports Utility Vehicle, known as the the BAIC X25, in the fourth quarter of 2018.

The BAIC investment was signed in 2015.

The completion of the R2bn first phase of the larger investment, unveiled at an event in Port Elizabeth on Tuesday, includes an automobile assembly plant located in SA’s vehicle manufacturing hub of the Eastern Cape town.

The plant is located in the Coega Special Economic Zone and will employ 120 people by the end of the year.

BAIC, in a statement, said the first phase of its SA plant comprised a 4 200 m² office block, an assembly and body shop of 42 000 m², and robotic equipment.

Construction is set to commence shortly on the 21 000 m² paint shop, scheduled for completion by the end of 2019.

The BAIC Group is a Chinese holding company that includes numerous auto manufacturers.

In addition to BAIC models, it produces both Hyundai and Mercedes-branded cars for the Chinese market via its Beijing Hyundai and Beijing Benz joint venture agreements.

BAIC announced that 60% of vehicles manufactured at the BAIC SA plant were destined for export markets in Africa, the Middle East and Latin America. The remaining 40% would serve the local market. The group currently has 17 dealerships countrywide, and plans to announce further expansions.

Xu Heyi, chairperson of BAIC Group, said in a statement on Tuesday that BAIC’s SA investment "advances both countries and is testimony to this week’s Brics Summit theme, which centres on inclusive growth and shared prosperity in the 4th Industrial Revolution."

Geoffrey Qhena, head of the Industrial Development Corporation, said the investment would create positive spinoffs, such as "additional investments and job creation from the numerous local and foreign components manufactured in the supply chain."

According to its website, the 1.5litre X25 costs between R219 990 and R249 990.

The announcement that BAIC will start producing SUVs in Port Elizabeth comes less than a month after Mercedes-Benz announced it would be producing the next generation of its C-Class cars in East London, an investment that will include a R10bn expansion of its current auto plant there.